A Message from Consumer Action

Consumer Action's MoneyWi$e educational materials have moved to our Managing Money Project website. Here you may view, download and order bulk copies of the MoneyWi$e materials. Please make a note of the Managing Money Project address— www.managing-money.org —and add it to your address book.

What people are saying

Thank you for the opportunity to attend your recent Economic Survival Guide for Servicemembers and Veterans training session in Jersey City. This helpful class explored a wide range of laws, regulations and opportunities that protect and benefit military service members. — Steven Drulis, New Jersey Coalition for Financial Education

Did you know?

Many people are daunted by the thought of making a call to their elected officials. If you’re one of them, check out this Tumblr post by Cordelia McGee-Tubb, a cartoonist, web developer and accessibility advocate based in San Francisco. Follow the cute illustrations and helpful advice to a place where you say to yourself, “I can do this! It’s not impossible.” Several motivational and informational resources for reaching your members of Congress are included in the post. And, while a call is more impactful, if you’re still not comfortable picking up the phone, you can always use Consumer Action’s handy “Compose your own message” tool to email your lawmakers about whatever issues you’re passionate about.

Timely new guides help online shoppers

January 5th was National Returns Day, dubbed so by UPS, which predicted that it would process a record 1.3 million return packages that day (in other words, all those holiday gifts of too-small shoes and sweaters that you wouldn’t be caught dead in). Six million returns were expected the week of January 5th alone. These numbers represent just how popular online shopping has become, but buying over the internet isn’t without its issues—the potential for lost or damaged packages, disagreements over who should pay the shipping charges and return/exchange delays, for example.

To help consumers get the resolution they’re looking for in the most efficient and hassle-free way, Consumer Action has created two free guides full of tips and resources for resolving current problems and avoiding issues with online orders in the future.

What steps to take to reduce the likelihood of online shopping issues;

How to distinguish between customer service issues and legitimate disputes;

The steps for communicating effectively with the merchant about a problem;

Options for when you can’t resolve a problem directly with the merchant;

How the mediation and dispute processes work; and

Where to learn more or get help.

Savvy shopping practices that consumers can employ include buying only on retailer sites that use encryption to protect user data, checking reviews and “testing” a merchant’s responsiveness before placing an order, paying with a credit card and/or using an intermediary such as PayPal. Consumers should also make sure that they understand the merchant’s return/exchange policy and keep all receipts and communications. To avoid unwarranted credit card disputes, which are expensive for merchants and time-consuming for both parties, shoppers are also encouraged to distinguish between routine customer service issues and genuine disputes.

In many cases, complaining effectively is the key to getting satisfactory resolution directly from a merchant. Fortunately, Consumer Action’s How to Complainguide explains how to be heard and get results. If that doesn’t work, online mediation—help from a third-party negotiator—might be an option.

“There’s no question that the internet offers consumers a lot of benefits, but that doesn’t mean that online shopping transactions always go smoothly,” said Ken McEldowney, Consumer Action’s executive director. “This new module prepares consumers to make wise choices whenever they shop online and empowers them to deal effectively with any problems that might arise.”

The two consumer fact sheets—both in English and Spanish—are available for free download on the Consumer Action website via the links at the beginning of this article. The training components of the module—a topic backgrounder (Q&A), lesson plan and companion PowerPoint presentation to be used by consumer educators in their communities—are expected to be available by March 1, and will be promoted by email to the organization’s national network of nearly 7,000 community groups.

The Savvy Online Shopping module was created with support from eConsumer Services, a third-party clearinghouse between consumers, merchants and their banks and provider of online mediation services for consumers dissatisfied with credit card purchases made online or by phone.

Free publication provides EITC updates for 2017 tax filers

The Earned Income Tax Credit (EITC or EIC) puts money back into the pockets of qualifying low- and moderate-income working taxpayers when they file their tax returns. To help eligible filers receive the money they are entitled to, Consumer Action has again updated its popular EITC publication, Get Credit for Your Hard Work. Higher income limits and credits this year mean that even filers who haven’t qualified for the EITC in the past might be eligible this year, and those who do qualify will get a bigger check. (EITC income limits and credits change each year to keep pace with inflation.)

In short, the EITC helps reduce poverty for working families—qualifying taxpayers can get a check back even if they don’t owe any taxes—but they must file in order to claim the credit (even if their income is so low that they normally would not file a tax return). Households move into and out of eligibility based on changes in their marital, parental and financial status and changes in EITC income limits, so low- and moderate-income workers should check their eligibility each year even if they didn’t qualify in previous years.

Updated for the 2016 tax year, Get Credit for Your Hard Work covers:

Qualification guidelines;

Income limits for single and married taxpayers with and without children;

Credit amounts, depending on marital status and number of children (if any);

Information about claiming the EITC; and

Resources for learning more and getting low- or no-cost tax filing assistance.

New this year: Some early filers will have to wait longer to receive their money. Low-income taxpayers who claim the EITC or the Additional Child Tax Credit (ACTC) very early in the year should not expect to see a tax refund until mid to late February. This is because, under the Protecting Americans from Tax Hikes (PATH) Act, the IRS is required to delay refunds on tax returns claiming the EITC or the ACTC until February 15th (in order to give the tax agency time to detect and stop tax fraud). The law requires the IRS to withhold the entire refund—even the portion not related to the EITC or ACTC. The IRS has warned that, realistically, these taxpayers won’t receive refunds until the week of Feb. 27th. Nevertheless, the agency recommends that consumers file their tax returns as early as possible to prevent further delays due to math errors or other processing problems. The Internal Revenue Service (IRS) plans to post projected refund direct deposit dates on the “Where’s My Refund?” section of the agency website.

For years, Consumer Action has urged filers to beware of “no fee” refund advance loans (RALs), refund advance checks (RACs) and similar products, which have typically been costly—even when the fee was hidden—and not worth the price. But now, some large tax-preparation companies are offering a new fast-refund-advance product that is truly fee-free. While a rapid refund might not cost you the way it used to, filers should be aware that they will still need to pay for the provider’s tax preparation services, which can cost hundreds of dollars. And tax preparers who offer the free advances are likely to try to cross-sell other fee products and services, like a “refund transfer” (a temporary bank account set up to collect the refund, from which the preparer’s fee is deducted if the filer can’t afford to pay it upfront) or a reloadable prepaid debit card onto which filers are encouraged to receive their refunds (customers who are offered and accept a credit line on the card will be charged an annual fee and a relatively high interest rate on any outstanding balance).

Low- and moderate-income filers often qualify for free or low-cost tax preparation assistance from the resources included in Consumer Action’s EITC fact sheet, and should explore those options first. If a paid tax preparer is your only option, it pays to shop around. Tax preparation fees vary widely: A 2016 study by consumer advocacy group Georgia Watch found prices ranging from $125 to $457 to prepare the exact same return.

Consumer Action’s EITC resource is available for free as an online article or as a printable PDF download in English, Spanish, Chinese, Korean and Vietnamese.

Hotline Chronicles: You pay for paid tax preparer mistakes

Carlie* from upstate New York submitted a complaint to Consumer Action’s advice and referral hotline about a paid tax preparer who, without her knowledge, filed an amended tax return for the previous tax year, costing her big-time.

“Our preparer passed away at the end of 2015 and we were notified that a new tax preparer at the company would be taking over his accounts,” Carlie explained. Having had no issues with the previous preparer at the same firm, Carlie said she and her husband took “our 2015 tax information to the new preparer along with our 2014 completed returns for reference. He never met with us or called us with any questions. He just notified us when the returns were ready. When we picked up our completed returns, we were handed a bill not only for the 2015 tax preparation, but also for amended 2014 tax returns, which we had NOT requested.”

Carlie said the preparer told her that submitting the amended return would result in a refund of about $700 for the 2014 tax year. “Well that turned out to be a huge mistake,” Carlie recounted.

“We have repeatedly been asked by the New York State Department of Taxation and Finance to pay $800 more in taxes for 2014, plus penalties. And despite repeated attempts to contact the preparer, he doesn't respond,” she lamented.

The good news for Carlie is that New York is one of only four states (along with Maryland, Oregon and California) that license paid tax preparers. We recommended Carlie reference New York State’s “Consumer Bill of Rights regarding tax preparers” for information on how to file a complaint. We also advised she consult with a more responsive preparer or a qualified tax attorney.

Consumers can also check with friends and family or the Better Business Bureau to see if others have complained about the preparers they are considering. However, it may be more difficult to compare the cost of preparing returns. Tax preparation fees are often high and may not be disclosed in advance, making it nearly impossible for consumers to compare services. Many will claim they cannot give a price quote or will give inaccurate estimates. But even worse, consumers are legally liable for any mistakes made by the preparer. While some paid preparers stand by customers if they are audited, many will charge additional funds to follow up on letters from the Internal Revenue Service (IRS).

In the vast majority of states, paid tax preparers are not required to meet any minimum educational, competency or training standards. While some tax preparers are licensed as certified public accountants (CPAs) or credentialed by the IRS as enrolled agents, these certifications are not mandatory and most preparers do not have them. According to the Consumer Federation of America (CFA), the only tax preparers (apart from CPAs and enrolled agents) required to pass a test are the unpaid volunteers at Volunteer Income Tax Assistance (VITA) sites.

Unfortunately, mistakes by paid preparers are not uncommon. In 2014, the Government Accountability Office (GAO) sent undercover investigators to 19 randomly selected tax preparer offices. Only two of the 19 (or 11 percent of the returns) had the correct refund amount.

Consumer Action works with a coalition of groups pushing for standardized licensing and regulation of paid tax preparers. However, the fight has gone on for years, and (given the current political climate) it is unlikely that standardized regulations will be adopted any time soon.

In the meantime, here are some steps consumers can take to protect themselves:

Keep accurate records of incomes and deductions and sort and organize them during the year. Don’t leave this task until right before your taxes are due.

Shop around and compare the costs and services offered by at least three paid preparers before engaging a preparer to do your taxes. You can also check with friends and family, the Better Business Bureau or review sites like Yelp.

Work only with preparers or firms that guarantee—in writing—that they will stand by you if you are audited.

Carefully review your returns when they are completed by a paid preparer and question anything you don’t understand. Don’t sign or submit your returns until you are satisfied that the answers you are given by your preparer are accurate. Better to file for an extension than to submit inaccurate returns.

Contact your paid preparer immediately if you receive questions or an audit letter from the IRS or a state tax authority.

If you or your preparer made mistakes, file an amended return.

*Not this consumer’s real name

Consumer Action joins Alliance for Investor Education

Consumer Action is pleased to announce our new membership in the Alliance for Investor Education. Founded in 1996, the Alliance is a non-profit consortium of leading U.S. investor-related non-profit organizations, associations and governmental agencies dedicated to facilitating greater understanding of investing, investments and the financial markets. The Alliance and its allies work to educate and motivate current and prospective investors of all ages by providing access to a full range of unbiased, objective information.

Members of the Alliance contribute to a trove of educational materials (which can be found on the Alliance’s Investor’s Clearinghouse website), including (but not limited to) articles on how to save for retirement (from navigating mutual funds to opening a 401(k)), the dangers of alternative investments (like gold or Bitcoin) and how to avoid becoming a victim of financial fraud.

As a member of the Alliance for Investor Education, Consumer Action is now on the organization’s membership roster alongside such esteemed organizations as the Financial Industry Regulation Authority, the Investor Protection Trust and the American Association of Individual Investors.

“Partnering with the Alliance for Investor Education is a natural fit based on our decades of work educating consumers on financial and marketplace issues,” said Consumer Action Executive Director Ken McEldowney. “We’re excited to collaborate with the Alliance and, together, benefit an even larger audience of consumers with our multilingual educational materials, enriching interactive trainings and more.”

Consumer Action, Capital One host online banking webinars

Ready, Set, Bank (RSB) is a free online and in-person blended learning program designed to help seniors bridge the “digital divide” by learning about online and mobile banking. Capital One, along with its partners, Older Adults Technology Services (OATS), Grovo (a tech company that helps advance employee and organizational learning) and the National Council on Aging (NCOA), launched their “Ready, Set, Bank: Online Banking Made Easy” pilot program at the OATS Senior Planet Exploration Center in New York City before they and Consumer Action co-hosted two webinars on Dec. 8 to educate our organization’s community partners on the program. Sixty-seven of our community partners took advantage of the opportunity.

Kimberly Allman, director of community development banking at Capital One, taught both of the webinars, which can be accessed here.

Ready, Set, Bank incorporates short videos that are two minutes or less in length with hands-on training and printed materials in each course. Sample videos and course materials are available to view at the Ready, Set, Bank website. Community groups that are interested in using the full Ready, Set, Bank tool must register with Grovoe. Currently, the tool is only available in English, but there are plans to translate the material to Spanish.

“The tool is very user-friendly,” said Consumer Action’s Audrey Perrott. “And the short videos are engaging and take into consideration different learning styles. Some of Consumer Action’s partners and former grantees have already started using these resources, and I cannot wait for them to share best practices from what they’ve learned.”

Capital One and Consumer Action will co-host two remaining webinars, for which dates have yet to be determined. One will cover Capital One’s Digital Literacy Challenge (emphasizing the digital skills needed for today’s workforce) and the other will focus on CreditWise®—the company’s free credit monitoring tool, which provides consumers with access to credit scores, credit alerts, credit score simulators and more.

Coalition Efforts: Cabinet posts, FinTech regs and recalled cars

The “Foreclosure King” is an unfit choice to run the U.S. Treasury. Consumer Action and a coalition of allies firmly believe that President Donald Trump’s pick to run the U.S. Treasury Secretary, Steven Mnuchin, is not fit to serve in what is one of government’s most important positions. Mnuchin, a former Goldman Sachs partner and hedge fund operator who has never held public office before, earned the nickname “The Foreclosure King” due to the unethical practices he oversaw during the housing crisis. As the chief executive of OneWest bank, Mnuchin executed tens of thousands of questionable foreclosures, which were particularly concentrated in minority communities. Over the past decade, this country has seen the disastrous economic results of policies that permit the wealthiest and most powerful institutions and individuals in our society (like Mnuchin) to engage in predatory financial practices that devastate ordinary American families. We join our allies in asking the Senate to oppose Mnuchin based on his record. Learn more and read the letter.

Advertising recalled vehicles as “safe” is bad business for consumers. Most recalled consumer products are illegal to sell until the product has been repaired or replaced. However, unsafe recalled vehicles are allowed to continue operating on the road while a fix is pending. These cars and trucks may also be sold before the recall repair has been done. We think that’s wrong and dangerous for consumers. Coalition advocates joined together in asking the Federal Trade Commission to prohibit auto dealers, including retail giant CarMax, from engaging in false advertising regarding the safety of unrepaired recalled cars. (The FTC recently proposed a settlement agreement that would allow these dealers to falsely advertise the cars as “safe,” “repaired for safety issues” or “subject to a rigorous inspection.”) Learn more and read the letter.

Innovation should not come at the expense of consumer protection. Last month, more than 250 groups sent a letter to Comptroller of the Currency Thomas J. Curry urging him not to grant national charters to financial technology (or “FinTech”) firms. These charters could pre-empt stronger state oversight and state consumer protection laws that protect individual borrowers and small businesses from abusive financial practices like predatory lending. The letter sends a strong message to the Office of the Comptroller of the Currency about the risk the charters create to state-level protections that ensure interest rates are capped at a reasonable level, state regulators are free to do their jobs and more. Learn more and read the letter.

Five senators should recuse themselves from confirming nominee for Secretary of Education. Five U.S. senators on the Health, Education, Labor & Pensions (HELP) committee received hundreds of thousands of dollars in political contributions from President Trump’s nominee for Secretary of Education, Betsy DeVos. As a body entrusted with vetting this nominee and examining her views on public policy, we believe that the Senate must uphold the strongest ethical standards throughout the nomination process. Consumer Action and a number of allies pointed out that these generous contributions present a remarkable conflict of interest. We demanded the beneficiaries of DeVos’s largesse recuse themselves from voting on her confirmation as Education Secretary. Learn more and read the letter.

Another noteworthy year: Consumer Action’s 2016 annual report

Consumer Action’s annual report for fiscal year 2016, covering the period of April 1, 2015 through March 31, 2016, is now available for download.

The pages of the 2016 annual report chronicle a standout year for the organization, both in terms of the breadth of Consumer Action’s work during the 12 months covered and the effectiveness of our efforts and collaborations.

Over the course of the year, the organization’s 24 staff members in San Francisco, Los Angeles and Washington, DC met with numerous government agencies and regulators regarding critical consumer concerns; championed causes that would make the financial marketplace more hospitable and equitable for all consumers; and weighed in wherever our voice might amplify the call for justice and redress for aggrieved individuals. We also educated hundreds of community educators and thousands of consumers on topics ranging from social media safety to credit scores and personal finance; responded to 5,781 consumer complaints and communications via phone and email; created or updated dozens of training modules, stand-alone publications and newsletters; filled 1,545 requests for 359,701 printed copies of our free, multilingual publications; and grew our online presence and social media reach to over one-and-a-half-million page views, 116,827 email list subscribers, 3,586 Facebook fans and 2,693 followers on Twitter.

Download the annual report to read more about our work. In addition to outlining the aforementioned achievements, the report offers an in-depth look at our annual National Consumer Empowerment Conference, Consumer Excellence Awards ceremony and other events and trainings held across the country. It also provides detailed and fascinating profiles of some of our highly respected community partners and valued staff members.

“We owe a debt of gratitude to the many individuals, companies, non-profits, advocates and government agencies that supported us, collaborated with us and made our achievements during this past fiscal year possible,” said Linda Sherry, Consumer Action’s director of national priorities. She noted, however, that we are now facing fresh challenges to consumer protections from a new administration and Congress, and that, despite our accomplishments, this is no time to rest.

Executive Director Ken McEldowney concurred, reassuring readers (in his letter on page 4 of the report) that “our staff is preparing to roll up our sleeves and get to work informing and protecting consumers in an environment where our work will become even more crucial.”

The Consumer Financial Protection Bureau (CFPB) has ordered TransUnion and Equifax, two of the nation’s three big credit bureaus, to repay $17.6 million for deceiving consumers about the usefulness of the credit scores they sold. The bureaus marketed the credit scores as “the same scores lenders typically use to make credit decisions.” In reality, the scores they sold are not commonly used in making actual lending decisions.

The CFPB charged that consumers also were misled into thinking the scores and credit monitoring products were free or cost only one dollar a month, when in fact, the CFPB says, consumers were automatically enrolled for a monthly subscription fee of $16 unless they cancelled within the first free week or month.

In addition to the refunds, the CFPB has ordered both credit bureaus to truthfully explain the value of the credit scores they sell and to obtain the consumer’s consent before enrolling them in any credit product with recurring fees. They must also create an easy way for consumers to cancel recurring charges.

TransUnion will return $13.9 million and Equifax $3.8 million to affected consumers, plus pay the CFPB a combined $5.5 million in penalties.

Credit scores can vary depending on the data used to calculate them, the source of the information and when the score was created. There is no one credit score per person. Click here for tips on understanding your score(s).

Consumers give their take on debt collection tactics

One in four consumers contacted by a debt collector has felt threatened, according to a recent CFPB report. What’s more, 75 percent of consumers who asked collectors to stop contacting them did not have their requests honored. While it does not erase the debt that’s owed, a collector is legally obligated to stop contacting a consumer if the consumer asks them to do so.

The CFPB’s study is the first ever in-depth analysis of consumers’ experiences with debt collectors. The study also exposes potential risks online, “where consumer debts and personal information are for sale for fractions of pennies on the dollar.” The study found that some online lists of debts include unencrypted sensitive information such as Social Security numbers, home addresses and phone numbers.

Creditors and debt collectors contacted approximately 70 million consumers in the last 12 months, mostly about medical or credit card debt. More than half (53%) of these consumers said that either the debt in question was not owed, the amount they were accused of owing was wrong or the person owing the debt was not them (but a family member). Fifteen percent said they were sued over a debt in the last year. The study also reveals that about 75 percent of those sued did not attend the court hearing, which usually makes them responsible for the debt, whether they should be or not. The high figure of no-shows also perhaps indicates a prevailing problem in which those being sued are not properly notified by collectors in advance of the hearings.

Debt collection is the issue that the Bureau receives the most complaints about. These complaints often revolve around misinformation, lack of information and improper contact. You can report a debt collection complaint to the CFPB here. The CFPB has returned more than $300 million to consumers harmed by abusive and/or deceptive debt collection and provided billions of dollars in debt relief (stemming from legal cases brought against abusive and/or deceptive debt collectors and practices).

The CFPB outlined some proposals last summer to begin to regulate third-party debt collection. The proposals include improving the quality of the information collected about debts and limiting the frequency of collector contact. Consumer groups, including Consumer Action, do not believe that the Bureau’s current debt collection proposals are sufficient to limit abusive practices and protect consumers, and believe that stronger rules are required.

Student loan servicing: ‘Deception at every stage of repayment’

The CFPB has sued the nation’s largest student loan servicer, Navient, for “illegally cheating struggling borrowers out of their rights to lower repayments.” The Bureau intends to recover money for these student loan borrowers.

Class Action Database: Formaldehyde in your flooring

This month we highlight a major class action against Floor & Decor Outlets of America, Inc. (“FD”) alleging that the company falsely labeled and sold certain Chinese-made laminate flooring as meeting the California Air Resources Board (“CARB”) standards for formaldehyde emissions (“off-gassing”). During the manufacturing of manufactured wood products, including laminate flooring, the chemical formaldehyde gets introduced into the air. Short-term exposure to formaldehyde can cause coughing, wheezing, skin irritation and more. According to studies, long-term exposure can cause cancer. CARB limits the amount of formaldehyde that can be present in wood products. CARB standards apply to anyone who manufactures, distributes, imports, sells or supplies such products in California.

FD denied the allegations but agreed to a settlement to avoid the burden, expense and risk of continuing the lawsuit.

The settlement will provide class members relief through a $14 million fund. It also pays the costs to test certain products for formaldehyde.

You are a part of the class if you purchased certain Chinese-made laminate flooring from FD between January 1, 2012 and August 1, 2015 and if you still currently own the flooring. The class is divided into a “non-testing” and “testing” subclass based on the laminate flooring’s SKU number:

1. Non-testing subclass members can receive either $1.50 cash per square foot or $3 store credit per square foot of purchased flooring.

2. Testing subclass members must submit a flooring sample for testing by an appointed third-party lab. The results must show that the sample exceeds 0.084 formaldehyde parts per million in order to receive cash or store credit from the settlement.

The claims deadline is March 7, 2017. For more information, visit the official settlement website here.

About Consumer Action

Consumer Action is a non-profit 501(c)(3) organization that has championed the rights of underrepresented consumers nationwide since 1971. Throughout its history, the organization has dedicated its resources to promoting financial and consumer literacy and advocating for consumer rights in both the media and before lawmakers to promote economic justice for all. With the resources and infrastructure to reach millions of consumers, Consumer Action is one of the most recognized, effective and trusted consumer organizations in the nation.

Consumer education. To empower consumers to assert their rights in the marketplace, Consumer Action provides a range of educational resources. The organization’s extensive library of free publications offers in-depth information on many topics related to personal money management, housing, insurance and privacy, while its hotline provides non-legal advice and referrals. At Consumer-Action.org, visitors have instant access to important consumer news, downloadable materials, an online “help desk,” the Take Action advocacy database and nine topic-specific subsites. Consumer Action also publishes unbiased surveys of financial and consumer services that expose excessive prices and anti-consumer practices to help consumers make informed buying choices and elicit change from big business.

Community outreach. With a special focus on serving low- and moderate-income and limited-English-speaking consumers, Consumer Action maintains strong ties to a national network of nearly 7,000 community-based organizations. Outreach services include training and free mailings of financial and consumer education materials in many languages, including English, Spanish, Chinese, Korean and Vietnamese. Consumer Action’s network is the largest and most diverse of its kind.

Advocacy. Consumer Action is deeply committed to ensuring that underrepresented consumers are represented in the national media and in front of lawmakers. The organization promotes pro-consumer policy, regulation and legislation by taking positions on dozens of bills at the state and national levels and submitting comments and testimony on a host of consumer protection issues. Additionally, its diverse staff provides the media with expert commentary on key consumer issues supported by solid data and victim testimony.